Corporate debt reduction and preferred stock redemption throughout
2016 under the current program totaled $1.0 billion; approximately
$100 million1 of recurring FCFbG

Exceeded the targeted $400 million in cost reductions by over $100
million, ahead of the anticipated 2017 time frame

Executed agreements with NRG Yield to drop down 311 net MWs of
utility-scale solar assets for total cash consideration of $130 million2
and expanded Right of First Offer (ROFO) pipeline by 234
net MW; raised another $128 million3 through
non-recourse financing at Agua Caliente

2.2 GW of coal-to-gas conversions and Petra Nova Project completed
on time and on budget

Recorded $1.2 billion non-cash asset and goodwill impairment charge

February 28, 2017 06:52 AM Eastern Standard Time

PRINCETON, N.J.--(BUSINESS WIRE)--NRG Energy, Inc. (NYSE:NRG) today reported full year 2016 net loss of
$891 million, or $2.22 per diluted common share. The loss and resulting
loss per share were driven by a $1.2 billion impairment of goodwill and
fixed assets as forecasted gas and power prices continue to decline.
Adjusted EBITDA for the full year 2016 was $3.3 billion, cash from
operations was $2.1 billion and FCFbG was $1.2 billion. Additionally,
NRG realized its second best safety year in company history with a full
year top decile recordable rate of 0.624.

“Our business delivered a year of strong results, both EBITDA and Free
Cash Flow, driven by Retail, which had a record 2016 adjusted EBITDA and
its third consecutive year of EBITDA growth,” said Mauricio Gutierrez,
NRG President and Chief Executive Officer. “Our focus on strategic
priorities and strong execution in 2016 sets the foundation for 2017,
allowing us to seize market opportunities while continuing to streamline
the business, strengthen the balance sheet and deliver value to
shareholders.”

Consolidated Financial Results

Three Months Ended

Twelve Months Ended

($ in millions)

12/31/16

12/31/15

12/31/16

12/31/15

Net Loss

$

(1,055

)

$

(6,358

)

$

(891

)

$

(6,436

)

Cash From Operations

$

339

$

(83

)

$

2,072

$

1,309

Adjusted EBITDAa

$

492

$

582

$

3,257

$

3,166

Free Cash Flow Before Growth (FCFbG)

$

78

$

(8

)

$

1,209

$

1,127

a.

For comparability, 2015 results have been restated to include the
negative contribution from Residential Solar of $43 million and $173
million for the three and twelve months ended December 31, 2015.

Segment Results

As part of its streamlining strategy, NRG has realigned its reporting
segments to more clearly report Generation and Retail activities.
Accordingly, customer-facing businesses will now reside in the Retail
segment. The Company's Retail segment will now include Business
Solutions which includes Commercial & Industrial (C&I) previously in
Generation, and the Generation segment now includes BETM. The results of
the Company have been recast to reflect these changes.

Table 1: Net (Loss)/Income

($ in millions)

Three Months Ended

Twelve Months Ended

Segment

12/31/16

12/31/15

12/31/16

12/31/15

Generation

$

(889

)

$

(4,690

)

$

(507

)

$

(4,446

)

Retail

316

161

1,045

624

Renewables a

(204

)

(18

)

(306

)

(92

)

NRG Yield a

(126

)

12

(15

)

65

Corporate b

(152

)

(1,823

)

(1,108

)

(2,587

)

Net Loss c

$

(1,055

)

$

(6,358

)

$

(891

)

$

(6,436

)

a.

In accordance with GAAP, 2015 results have been restated to include
full impact of the assets in the NRG Yield Drop Down transactions
which closed on November 3, 2015, and September 1, 2016.

b.

Includes Residential Solar.

c.

Includes mark-to-market gains and losses of economic hedges.

The net loss for the twelve months of 2016 was driven by a $1.2 billion
impairment of goodwill and fixed assets as forecasted gas and power
prices continue to decline. The net loss for the twelve months of 2015
includes non-cash charges of $3.3 billion5 and $3.0 billion
for asset impairments net of taxes and income tax valuation allowance
expense, respectively.

Table 2: Adjusted EBITDA

($ in millions)

Three Months Ended

Twelve Months Ended

Segment

12/31/16

12/31/15

12/31/16

12/31/15

Generation a

$

160

$

300

$

1,505

$

1,759

Retail

134

149

811

793

Renewables b

26

27

187

158

NRG Yield b

207

189

899

758

Corporate c

(35

)

(83

)

(145

)

(302

)

Adjusted EBITDA d

$

492

$

582

$

3,257

$

3,166

a.

See Appendices A-6 through A-9 for Generation regional Reg G results.

b.

In accordance with GAAP, 2015 results have been restated to include
full impact of the assets in the NRG Yield Drop Down transactions
which closed on November 3, 2015, and September 1, 2016.

c.

2016 includes Residential Solar. 2015 results have been restated to
include negative contribution of $43 million and $173 million for
the three and twelve months ended December 31, 2015, respectively.

Gulf Coast Region: $93 million decrease due to lower average realized
energy margins in Texas from the decline in power prices, offset by
lower operating costs.

East Region: $365 million decrease from lower dispatch and capacity
prices, partially offset by the monetization of forward hedges and
lower operating costs on decreased run times, deactivations and plant
sales.

West Region: $122 million increase due to gains from sale of real
property at Potrero site, emission credit sales and lower operating
costs, partially offset by lower capacity revenues.

Other Generation: $82 million increase driven by favorable trading
results at BETM.

East Region: $128 million lower due to lower realized energy margins
and lower capacity prices.

West Region: $11 million increase due to higher capacity revenues and
lower operating costs.

Retail: Full year 2016 Adjusted EBITDA was $811 million, $18
million higher than 2015 driven by lower costs, increased retail margins
and favorable settlement of a Texas sales tax audit, partially offset by
unfavorable impacts from selling back excess supply due to milder
weather conditions in 2016 as compared to 2015 and lower volumes driven
by lower average customer usage.

Fourth quarter Adjusted EBITDA was $134 million, $15 million lower than
the fourth quarter 2015 due primarily to an increase in spend associated
with customer growth initiatives.

Renewables: Full year 2016 Adjusted EBITDA was $187 million, $29
million higher than 2015 due mainly to increased generation at Ivanpah
and Mountain Wind and lower operating expenses while fourth quarter
Adjusted EBITDA was $1 million higher than the prior year due primarily
to increased generation at Ivanpah.

NRG Yield: Full year 2016 Adjusted EBITDA was $899 million, $141
million higher than 2015 due primarily to increased wind production from
Renewables, full year contributions from the acquisitions of Desert
Sunlight and Spring Canyon which closed in 2015, and a receipt of
insurance proceeds from a 2014 wind outage claim.

Fourth quarter Adjusted EBITDA was $207 million, $18 million higher than
the fourth quarter 2015 due primarily to increased production in the
Renewables segment and a receipt of insurance proceeds from a 2014 wind
outage claim.

Corporate: Full year 2016 Adjusted EBITDA was $(145) million,
$157 million better than 2015 due to reduced operating expenses at
Residential Solar and other expense reductions, also driving the fourth
quarter Adjusted EBITDA which was $48 million favorable to 2015.

Liquidity and Capital Resources

Table 3: Corporate Liquidity

($ in millions)

12/31/16

12/31/15

Cash at NRG-Level a

$

570

$

693

Revolver

1,217

1,373

NRG-Level Liquidity

$

1,787

$

2,066

Restricted cash

446

414

Cash at Non-Guarantor Subsidiaries

1,403

825

Total Liquidity

$

3,636

$

3,305

a.

December 31, 2016, balance includes $247 million of unrestricted
cash held at Midwest Generation (a non-guarantor subsidiary) which
can be distributed to NRG without limitation.

NRG-Level cash as of December 31, 2016, was $570 million, a decrease of
$123 million from the end of 2015, and $1.2 billion was available under
the Company’s credit facilities at the end of 2016. Total liquidity was
$3.6 billion, including restricted cash and cash at non-guarantor
subsidiaries (primarily GenOn and NRG Yield).

NRG Strategic Developments

Drop Down Assets and Expanded ROFO Pipeline

In December 2016, NRG offered NRG Yield the opportunity to purchase the
following assets: (i) the Minnesota Portfolio, a 40 MW portfolio of wind
projects; (ii) the 30 MW Community wind projects; (iii) the 50 MW
Jeffers wind projects; and (iv) a 16% interest in the 290 MW Agua
Caliente solar facility, pursuant to the ROFO Agreement. In addition to
these ROFO Assets, NRG also offered NRG Yield the opportunity to
purchase NRG's 50% interests in seven utility-scale solar projects
located in Utah, representing 265 net MW of capacity6.

On February 24, 2017, NRG entered into a definitive agreement with NRG
Yield to drop down the Agua Caliente and Utah utility-scale solar
projects (311 net MW) for cash consideration of $130 million, plus
assumed non-recourse project debt of approximately $464 million7,
excluding working capital and other adjustments. Details of the
projects, which are expected to close in the second quarter of 2017,
include:

A 16% interest (approximately 31% of NRG's 51% interest) in the Agua
Caliente solar project, one of the ROFO Assets, representing ownership
of approximately 46 net MW of capacity. Prior to the agreement, on
February 17, 2017, NRG decreased its equity investment through an
incremental $128 million non-recourse project-level note, after fees,
all of which was distributed to NRG.

NRG's 50% interest in seven utility-scale solar projects located in
Utah representing 265 net MW of capacity. NRG acquired the Utah assets
in November 2016 for upfront cash consideration of $111 million and
subsequent to closing reduced the effective cash consideration paid to
$63 million as a result of additional non-recourse project-level
financings of $48 million8 during the fourth quarter of
2016.

NRG Yield elected not to pursue the acquisition of the Minnesota,
Community and Jeffers wind projects at this time, but may continue its
evaluation of the projects. NRG Yield has retained the right with NRG,
pursuant to the ROFO Agreement, to participate in any third party
process to the extent NRG elected to pursue a third party sale of these
assets.

In connection with the execution of the definitive agreement, NRG and
NRG Yield entered into an amendment to the ROFO Agreement to expand the
ROFO Assets pipeline with the addition of 234 net MW of utility-scale
solar projects. These assets include:

Buckthorn Solar, a 154 net MW facility located in Texas with a 25-year
PPA with City of Georgetown

The Hawaii Solar projects, which have a combined capacity of 80 net MW
with an average PPA of 22 years with the Hawaiian Electric Company9

Fleet Optimizations

NRG achieved a significant milestone in its fleet optimization strategy,
completing coal-to-gas projects at three generation facilities across
its fleet. The modified units can generate approximately 2.2 GW. The
three plants include the Joliet Generating Station (three units
converted by fourth quarter 2016 for a total of 1,326 MW), the Shawville
Generating Station (all four units are currently in final commissioning
following modification for a total of 597 MW) and the New Castle
Generating Station, (all three units have been modified by second
quarter 2016 for a total of 325 MW).

Over 2016, NRG continued to grow renewables development opportunities
with acquisitions of 1.7GW of wind and solar assets. As of December
2016, NRG held 543 MW of backlog in execution across the utility wind
and solar, community solar and DG solar businesses. Over the fourth
quarter 2016, NRG accelerated utility project origination across CAISO,
ERCOT and ISO-NE, growing the project pipeline to approximately 3.3 GW,
a 25% increase over the previous quarter. NRG successfully transitioned
2.7 GW of the combined NRG and NYLD fleet (approximately 26 wind and 7
solar projects) to self-perform operations in 2016, including Alta and
CVSR.

On December 29, 2016, NRG completed, on time and on budget, construction
and final acceptance of performance testing at the Petra Nova project,
the world's largest post-combustion carbon capture system. During
performance testing, the facility captured more than 90% of CO2 from a
240 MW equivalent slipstream of flue gas off an existing coal-fueled
electrical generating unit at the WA Parish power plant in Fort Bend
County, southwest of Houston. At this level of operation, Petra Nova can
capture more than 5,000 tons of CO2 per day, which is the equivalent of
taking more than 350,000 cars off the road.

In 2016, NRG completed the installation of environmental control
upgrades at its 638 MW Avon Lake Unit 9 facility (COD June 2016) and its
1,538 MW Powerton coal facility (COD December 2016).

2017 Guidance

NRG is reaffirming its guidance range for 2017 with respect to Adjusted
EBITDA, cash from operations and FCFbG as set forth below.

Table 4: 2017 Adjusted EBITDA and FCF before Growth Guidance

2017

($ in millions)

Guidance

Adjusted EBITDAa

$2,700 - $2,900

Cash From Operations

$1,355 - $1,555

Free Cash Flow - before Growth

$800 - $1,000

a.

Non-GAAP financial measure; see Appendix Table A-11 for GAAP
Reconciliation to Net Income that excludes fair value adjustments
related to derivatives. The Company is unable to provide guidance
for Net Income due to the impact of such fair value adjustments
related to derivatives in a given year.

Capital Allocation Update

On January 24, 2017, NRG repriced the 2023 Term Loan Facility, reducing
the interest rate margin by 50 basis points to LIBOR plus 2.25%. In
2016, NRG reduced corporate debt by $792 million10. Combined
with the debt repurchases in 2015 and the extension of debt maturities
at a lower average coupon rate, NRG has realized annual interest savings
of approximately $87 million, plus an additional $10 million in dividend
savings from the repurchase of 100% of its outstanding $345 million,
2.822% convertible perpetual preferred stock. NRG is also announcing
$200 million of additional capital reserved for debt reduction bringing
total 2017 allocation to discretionary debt reduction to $600 million.

On January 18, 2017, NRG declared a quarterly dividend on the Company's
common stock of $0.03 per share, payable February 15, 2017, to
stockholders of record as of February 1, 2017, representing $0.12 on an
annualized basis.

The Company’s common stock dividend, corporate level debt reduction and
share repurchases are subject to available capital, market conditions
and compliance with associated laws and regulations.

Earnings Conference Call

On February 28, 2017, NRG will host a conference call at 8:00 a.m.
Eastern to discuss these results. Investors, the news media and others
may access the live webcast of the conference call and accompanying
presentation materials by logging on to NRG’s website at http://www.nrg.comand clicking on “Investors.” The webcast will be archived on the
site for those unable to listen in real time.

About NRG

NRG is the leading integrated power company in the U.S., built on the
strength of the nation’s largest and most diverse competitive electric
generation portfolio and leading retail electricity platform. A Fortune
200 company, NRG creates value through best in class operations,
reliable and efficient electric generation, and a retail platform
serving residential and commercial customers. Working with electricity
customers, large and small, we continually innovate, embrace and
implement sustainable solutions for producing and managing energy. We
aim to be pioneers in developing smarter energy choices and delivering
exceptional service as our retail electricity providers serve almost 3
million residential and commercial customers throughout the country.
More information is available at www.nrg.com.
Connect with NRG Energy on Facebook and follow us on Twitter @nrgenergy.

Safe Harbor Disclosure

In addition to historical information, the information presented in this
communication includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act. These statements involve estimates, expectations,
projections, goals, assumptions, known and unknown risks and
uncertainties and can typically be identified by terminology such as
“may,” “should,” “could,” “objective,” “projection,” “forecast,” “goal,”
“guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,” “think,”
“anticipate,” “estimate,” “predict,” “target,” “potential” or
“continue,” or the negative of these terms or other comparable
terminology. Such forward-looking statements include, but are not
limited to, statements about the Company’s future revenues, income,
indebtedness, capital structure, plans, expectations, objectives,
projected financial performance and/or business results and other future
events, and views of economic and market conditions.

Although NRG believes that its expectations are reasonable, it can give
no assurance that these expectations will prove to be correct, and
actual results may vary materially. Factors that could cause actual
results to differ materially from those contemplated herein include,
among others, general economic conditions, hazards customary in the
power industry, weather conditions, including wind and solar
performance, competition in wholesale power markets, the volatility of
energy and fuel prices, failure of customers to perform under contracts,
changes in the wholesale power markets, changes in government
regulations, the condition of capital markets generally, our ability to
access capital markets, unanticipated outages at our generation
facilities, adverse results in current and future litigation, failure to
identify, execute or successfully implement acquisitions, repowerings or
asset sales, our ability to implement value enhancing improvements to
plant operations and companywide processes, our ability to proceed with
projects under development or the inability to complete the construction
of such projects on schedule or within budget, risks related to project
siting, financing, construction, permitting, government approvals and
the negotiation of project development agreements, our ability to
progress development pipeline projects, GenOn’s ability to continue as a
going concern, our ability to obtain federal loan guarantees, the
inability to maintain or create successful partnering relationships, our
ability to operate our businesses efficiently including NRG Yield, our
ability to retain retail customers, our ability to realize value through
our commercial operations strategy and the creation of NRG Yield, the
ability to successfully integrate businesses of acquired companies, our
ability to realize anticipated benefits of transactions (including
expected cost savings and other synergies) or the risk that anticipated
benefits may take longer to realize than expected, our ability to close
the Drop Down transactions with NRG Yield, and our ability to execute
our Capital Allocation Plan. Debt and share repurchases may be made from
time to time subject to market conditions and other factors, including
as permitted by United States securities laws. Furthermore, any common
stock dividend is subject to available capital and market conditions.

NRG undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. The adjusted EBITDA and free cash
flow guidance are estimates as of February 28, 2017. These estimates are
based on assumptions the company believed to be reasonable as of that
date. NRG disclaims any current intention to update such guidance,
except as required by law. The foregoing review of factors that could
cause NRG’s actual results to differ materially from those contemplated
in the forward-looking statements included in this Earnings press
release should be considered in connection with information regarding
risks and uncertainties that may affect NRG’s future results included in
NRG’s filings with the Securities and Exchange Commission at www.sec.gov.

1 $100 million savings driven by reduction of debt since 3rd
quarter of 2015, preferred stock redemption and extension of maturities
at lower interest rates

2 Subject to working capital and other adjustments

3 Net of financing fees

4 Excludes Goal Zero, NRG Home Services and Residential Solar

5 Total impairments of $5.1 billion net of taxes of $1.8
billion

6 Reflects NRG's net interest based on cash to be distributed
in tax equity partnership with Dominion

7 Approximately $328 million on balance sheet and $136
million pro-rata share of unconsolidated debt

The following table reconciles the condensed financial information to
Adjusted EBITDA:

Condensed

financial

Interest, tax,

Adjusted

($ in millions)

information

depr., amort.

MtM

Deactivation

Other adj.

EBITDA

Operating revenues

12,351

55

865

—

—

13,271

Cost of operations

5,989

(5

)

580

—

—

6,564

Gross margin

6,362

60

285

—

—

6,707

Operations & maintenance and other cost of operations

2,566

7

—

(21

)

—

2,552

Selling, marketing, general & administrative a

1,101

—

—

—

(29

)

1,072

Development costs

90

—

—

—

(4

)

86

Other expense/(income) b

3,496

(1,205

)

—

—

(2,551

)

(260

)

Net loss

(891

)

1,258

285

21

2,584

3,257

a.

Other adj. includes reorganization costs of $29 million.

b.

Other adj. includes impairments, gain/(loss) on sale of business and
acquisition-related transaction & integration costs.

Appendix Table A-4: Full Year 2015 Adjusted EBITDA Reconciliation by
Operating SegmentThe following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
(loss)/income:

The following table reconciles the condensed financial information to
Adjusted EBITDA:

Condensed

financial

Interest, tax,

Adjusted

($ in millions)

information

depr., amort.

MtM

Deactivation

Other adj.

EBITDA

Operating revenues

1,404

(3

)

137

—

—

1,538

Cost of operations

661

(1

)

10

—

—

670

Gross margin

743

(2

)

127

—

—

868

Operations & maintenance and other cost of operations

481

5

—

(3

)

—

483

Selling, marketing, general & administrative a

96

—

—

—

(3

)

93

Development costs

6

—

—

—

—

6

Other expense/(income) b

4,850

(12

)

—

—

(4,852

)

(14

)

Net loss

(4,690

)

5

127

3

4,855

300

a.

Other adj. includes reorganization costs of $3 million.

b.

Other adj. includes impairments.

Appendix Table A-8: Full Year 2016 Regional Adjusted EBITDA
Reconciliation for GenerationThe following table summarizes
the calculation of Adjusted EBITDA and provides a reconciliation to net
income/(loss)

The following table reconciles the condensed financial information to
Adjusted EBITDA:

Condensed

financial

Interest, tax,

Adjusted

($ in millions)

information

depr., amort.

MtM

Deactivation

Other adj.

EBITDA

Operating revenues

5,679

(15

)

787

—

—

6,451

Cost of operations

2,689

3

143

—

—

2,835

Gross Margin

2,990

(18

)

644

—

—

3,616

Operations & maintenance and other cost of operations

1,861

14

—

(19

)

—

1,856

Selling, marketing, general & administrative

372

—

—

—

—

372

Development costs

22

—

—

—

(1

)

21

Other expense/(income) a

1,242

(64

)

—

—

(1,316

)

(138

)

Net loss

(507

)

32

644

19

1,317

1,505

a.

Other adj. includes impairments.

Appendix Table A-9: Full Year 2015 Regional Adjusted EBITDA
Reconciliation for GenerationThe following table summarizes
the calculation of Adjusted EBITDA and provides a reconciliation to net
income/(loss)

EBITDA and Adjusted EBITDA are non-GAAP financial measures. These
measurements are not recognized in accordance with GAAP and should not
be viewed as an alternative to GAAP measures of performance. The
presentation of Adjusted EBITDA should not be construed as an inference
that NRG’s future results will be unaffected by unusual or non-recurring
items.

EBITDA represents net income before interest (including loss on debt
extinguishment), taxes, depreciation and amortization. EBITDA is
presented because NRG considers it an important supplemental measure of
its performance and believes debt-holders frequently use EBITDA to
analyze operating performance and debt service capacity. EBITDA has
limitations as an analytical tool, and you should not consider it in
isolation, or as a substitute for analysis of our operating results as
reported under GAAP. Some of these limitations are:

EBITDA does not reflect cash expenditures, or future requirements for
capital expenditures, or contractual commitments;

EBITDA does not reflect changes in, or cash requirements for, working
capital needs;

EBITDA does not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments, on
debt or cash income tax payments;

Although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be replaced
in the future, and EBITDA does not reflect any cash requirements for
such replacements; and

Other companies in this industry may calculate EBITDA differently than
NRG does, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA should not be considered as a
measure of discretionary cash available to use to invest in the growth
of NRG’s business. NRG compensates for these limitations by relying
primarily on our GAAP results and using EBITDA and Adjusted EBITDA only
supplementally. See the statements of cash flow included in the
financial statements that are a part of this news release.

Adjusted EBITDA is presented as a further supplemental measure of
operating performance. As NRG defines it, Adjusted EBITDA represents
EBITDA excluding impairment losses, gains or losses on sales,
dispositions or retirements of assets, any mark-to-market gains or
losses from accounting for derivatives, adjustments to exclude the
Adjusted EBITDA related to the non-controlling interest, gains or losses
on the repurchase, modification or extinguishment of debt, the impact of
restructuring and any extraordinary, unusual or non-recurring items plus
adjustments to reflect the Adjusted EBITDA from our unconsolidated
investments. The reader is encouraged to evaluate each adjustment and
the reasons NRG considers it appropriate for supplemental analysis. As
an analytical tool, Adjusted EBITDA is subject to all of the limitations
applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the
reader should be aware that in the future NRG may incur expenses similar
to the adjustments in this news release.

Management believes Adjusted EBITDA is useful to investors and other
users of NRG's financial statements in evaluating its operating
performance because it provides an additional tool to compare business
performance across companies and across periods and adjusts for items
that we do not consider indicative of NRG’s future operating
performance. This measure is widely used by debt-holders to analyze
operating performance and debt service capacity and by equity investors
to measure our operating performance without regard to items such as
interest expense, taxes, depreciation and amortization, which can vary
substantially from company to company depending upon accounting methods
and book value of assets, capital structure and the method by which
assets were acquired. Management uses Adjusted EBITDA as a measure of
operating performance to assist in comparing performance from period to
period on a consistent basis and to readily view operating trends, as a
measure for planning and forecasting overall expectations, and for
evaluating actual results against such expectations, and in
communications with NRG's Board of Directors, shareholders, creditors,
analysts and investors concerning its financial performance.

Adjusted cash flow from operating activities is a non-GAAP measure NRG
provides to show cash from operations with the reclassification of net
payments of derivative contracts acquired in business combinations from
financing to operating cash flow, as well as the add back of merger,
integration and related restructuring costs. The Company provides the
reader with this alternative view of operating cash flow because the
cash settlement of these derivative contracts materially impact
operating revenues and cost of sales, while GAAP requires NRG to treat
them as if there was a financing activity associated with the contracts
as of the acquisition dates. The Company adds back merger, integration
related restructuring costs as they are one time and unique in nature
and do not reflect ongoing cash from operations and they are fully
disclosed to investors.

Free cash flow (before Growth) is adjusted cash flow from operations
less maintenance and environmental capital expenditures, net of funding,
preferred stock dividends and distributions to non-controlling interests
and is used by NRG predominantly as a forecasting tool to estimate cash
available for debt reduction and other capital allocation alternatives.
The reader is encouraged to evaluate each of these adjustments and the
reasons NRG considers them appropriate for supplemental analysis.
Because we have mandatory debt service requirements (and other
non-discretionary expenditures) investors should not rely on free cash
flow before Growth as a measure of cash available for discretionary
expenditures.

Free Cash Flow before Growth is utilized by Management in making
decisions regarding the allocation of capital. Free Cash Flow before
Growth is presented because the Company believes it is a useful tool for
assessing the financial performance in the current period. In addition,
NRG’s peers evaluate cash available for allocation in a similar manner
and accordingly, it is a meaningful indicator for investors to benchmark
NRG's performance against its peers. Free Cash Flow before Growth is a
performance measure and is not intended to represent net income (loss),
cash from operations (the most directly comparable U.S. GAAP measure),
or liquidity and is not necessarily comparable to similarly titled
measures reported by other companies.